Semi-Annual Report
June 30, 1998
Legg Mason
Global
Trust, Inc.
Global Government Trust
International Equity Trust
Emerging Markets Trust
The Art of Investing
[LEGG MASON FUNDS LOGO APPEARS HERE]
Investment Advisers
For Global Government:
Western Asset Management Company
Pasadena, CA
For International Equity and
Emerging Markets Trusts:
Batterymarch Financial Management, Inc.
Boston, MA
Investment Manager
Legg Mason Fund Adviser, Inc.
Baltimore, MD
Board of Directors
John F. Curley, Jr., Chairman
Edward A. Taber, III, President
Richard G. Gilmore
Charles F. Haugh
Arnold L. Lehman
Dr. Jill E. McGovern
T. A. Rodgers
Transfer and Shareholder Servicing Agent
Boston Financial Data Services
Boston, MA
Custodian
State Street Bank & Trust Company
Boston, MA
Counsel
Kirkpatrick & Lockhart LLP
Washington, D.C.
Independent Accountants
PricewaterhouseCoopers LLP
Baltimore, MD
This report is not to be distributed unless preceded or accompanied by a
prospectus.
Legg Mason Wood Walker, Incorporated
-------------------------------------------
100 Light Street
P.O. Box 1476, Baltimore, MD 21203-1476
410 o 539 o 0000
LMF-042
<PAGE>
To Our Shareholders,
We are pleased to provide you with the semi-annual report for the Legg Mason
Global Trust, comprised of the Global Government Trust, International Equity
Trust and Emerging Markets Trust.
Beginning on the next page, the portfolio managers responsible for the Global
Trust portfolios discuss results for the first half of 1998 and the investment
outlook. The Funds' total returns in various periods since their inceptions are
shown on page 8. For each of our Funds, we remind you that historical
performance is not indicative of future results, and the principal value of our
holdings will continue to fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
We hope you will consider using the Trust for investments of additional funds
as they become available. Some shareholders have chosen to regularly add to
their investment in the Funds by authorizing automatic monthly transfers from
their bank checking or Legg Mason accounts. Your Financial Advisor will be happy
to help you make these arrangements if you would like to purchase additional
shares in this convenient manner.
Sincerely,
/s/ Edward A. Taber, III
___________________________
Edward A. Taber, III
President
August 4, 1998
<PAGE>
Portfolio Managers' Comments
Global Government Trust
MARKET OVERVIEW
For most of the first half of this year, fixed-income markets were dominated
by events overseas. Following a first-quarter remission, the Asian flu
re-emerged, and the emerging markets quickly joined the list of victims. The US
launched a surprise bailout of the Japanese yen in an attempt to limit the
spread of the disease. Global economic tensions rose as the yen fell, commodity
prices fell, Asian economies plumbed the depths of recession, and emerging
market debt spreads widened to near-default levels. In typical
bad-news-is-good-news fashion, global turmoil and deflating commodity prices
helped most developed country bond yields decline, while the dollar rose against
most currencies.
FUND PERFORMANCE
Though most developed country bond markets fared well in the first half of the
year, from the Fund's perspective the global scene was mixed. The Fund was well
positioned for declining yields, holding a long duration position in dollar bloc
bonds, and a severe underweighting to Japanese bonds where the yen also
contributed to underperforming returns. However, these contributions were
largely offset by the negative impact of the dramatic widening in spreads on
emerging market debt and South African debt which the Fund held. In addition,
the dollar continued to rise against most currencies, also offsetting some of
the favorable impact of higher bond prices. By the time the dust had settled,
the Global Government Trust generated a total return of 1.9% for the six months
ended June 30, 1998, reflecting a combination of income, capital gains and
currency losses. This represented a moderate degree of underperformance relative
to the 2.8% total return of the Fund's benchmark, the Salomon Brothers World
Government Bond Index during the same period.
MARKET COMMENTARY AND OUTLOOK
After many years of tight money, the Fed has succeeded in sharply reducing the
rate of inflation, but it has also set in motion two major and conflicting
forces: tight labor markets and the rising wages that accompany them are
clashing with zero pricing power to gradually squeeze corporate earnings. Low
inflation has fueled investment-led growth and technology-led productivity
gains, making labor scarce as it becomes more valuable. But a strong dollar and
falling commodity prices place severe limits on the pricing power of most
businesses.
This conflict eventually will be resolved in the form of slower growth in
corporate earnings, a moderation in the pace of hiring, and finally, a
moderation in the pace of overall growth.
Meanwhile, as a similar earnings squeeze slowly percolates through the global
economy, firms (and economies) that are heavily indebted in dollars and/or
exposed to commodity prices are suffering from a rapid escalation in their
effective debt burdens. Indeed, this is a fairly accurate description of the
dilemma facing most Asian and some emerging market economies today. Via its
impact on global economies, tight money has begun to impact our own economy, as
evidenced by a sharp dropoff in exports and a pronounced slowdown in the
manufacturing sector. Falling prices and lower interest costs have kept retail
sales fairly robust, but the overall economy cannot long avoid the fallout from
the devastation in Asia, one-third of global GDP.
Once the cracks in the US economy begin to widen, the door will open to Fed
ease. This eventually will allow short-term rates to fall, but long-term rates
are likely to lag (note: although it typically pro-
2
<PAGE>
vides short-term relief, Fed easing eventually makes the bond market nervous),
thus leading to a gradual steepening of the yield curve over time. In the
interim, the Fed's resolute determination to fight even the hint of inflation
will keep short rates on hold, thus leaving open the possibility of an inversion
of the curve as long rates continue to track the downward trend of inflation.
We expect that European economies are also likely to be affected by the Asian
recession, though the Asian drag on exports should be offset somewhat by the
emerging strength of domestic demand, with the notable exceptions being Germany
and Italy, which could experience a slower pace of growth near term. Taken
together, we expect that the conjunction of moderate growth in domestic demand,
weaker exports, high unemployment levels, tight fiscal policies and weak
commodity prices will keep inflationary pressures muted throughout Europe. Low
inflation fundamentals and a slow buildup in demand for the new unified Euro
currency should allow monetary policy to remain moderately accomodative yet
bond-friendly. The UK stands out, however, as the Bank of England, like the Fed,
remains concerned that tight labor markets are potentially inflationary. With
policy likely to remain tight for some time, the UK yield curve may invert
further still.
The outlook for Asia and Japan will be dominated by government attempts to
resolve what appears to be pandemic recessionary conditions. Although global
capital markets have been lightning quick to castigate Japan (and most other
Asian economies) for failing to adopt the proper policy initiatives, the
eventual solutions will likely play out over a timeline measured in years.
That's because the major obstacles to rapid progress, which appear to be
cultural, political, and structural, cannot be quickly overcome. Still, the path
to recovery seems fairly clear at this point: policies sooner or later must take
the form of tax cuts, financial market restructuring, and market deregulation.
The key to success will be both the timing and the speed with which these
measures are implemented.
Not to be overlooked amidst all the fuss over Asia are the opportunities which
are being created in the emerging market sector. Although a scenario in which
all emerging market countries default seems highly unlikely, today's 600 basis
point(1) spread on emerging market debt implies a 30-40% probability that such a
catastrophe will actually happen! That's a big silver lining behind the Asian
cloud, since there are a number of emerging market countries that continue to
enjoy attractive fundamentals in spite of the Asian turmoil.
STRATEGY
Consistent with this view, we anticipate remaining overweight duration in the
dollar bloc and European countries in anticipation of further declines in
yields. Japanese bond and currency exposure will remain severely underweight, as
fiscal policy disappointments and the government's inability to resort to
tighter monetary policy could weaken the yen, and successful attempts to restart
the economy should lead to higher interest rates over time. Our major focus will
be on spread products in the US and on emerging market debt, in the belief that
spreads at current levels are exceptionally attractive from a long-term
perspective. We are also overweight long maturity bonds in Italy in anticipation
of a gradual easing of monetary policy as the final European Monetary Union
("EMU") deadline approaches.
Western Asset Management Company
August 3, 1998
- ---------
(1) 100 basis points = 1%
3
<PAGE>
Portfolio Managers' Comments
International Equity Trust
The total return for the Legg Mason International Equity Trust was 18.1% for
the six months ended June 30, 1998, compared with the Morgan Stanley Capital
International Europe, Australia and Far East ("EAFE") Index return of 16.1%.
Over the longer-term, the Fund has also performed above the index. The Fund's
average annual total return for the three years ended June 30, 1998, was 13.3%,
compared with 11.0% for the EAFE Index. Over the three-year period, the Fund has
outperformed the Lipper Analytical Services, Inc. international fund average's
annualized total return of 12.8%.
The Fund's positive contribution to return for the six months came from stock
selection. In Europe, for example, stock selection was particularly strong in
Switzerland, France and Belgium. In addition, country selection overall was
positive. Most notably, the Fund's underweighted position in Japan added value,
as that market declined 2.5% over the period.
Japan saw little substantive action toward recovery. Estimates of a complete
bailout are as much as 10% to 15% of GDP but delays have led to even higher
costs in economic growth. The weak yen is driven by the fundamentals of the
economy. Although there is potential short-term benefit for export companies,
longer-term results are expected to remain weak. On top of fundamental problems,
capital outflow into US treasuries has made the yen weaken further. The consumer
surveys are pessimistic, near the 20-year lows set in 1993, and consumer
participation is crucial to a recovery.
Our earnings expectation rating for Japan remains in the lowest quintile
compared with other countries. Valuations throughout Asia including Japan have
fallen to levels not seen since the early 1980s, but earnings are still revising
downward, and technical momentum is negative. We continue to underweight Japan
although we find many attractive, well-managed companies in that market with
below average p/e ratios and higher growth expectations.
The return for the European region was 26.7%, well ahead of the EAFE Index.
Among the larger markets, the UK's return was 15.7%; Germany, 36.7%; France,
38.9%; and Switzerland, 20.7%.
Investors perceive Europe to be a safe haven. Economic growth continues to
strengthen throughout continental Europe, and EMU is progressing smoothly.
Monetary policy remains stimulative. Inflation is low, investment spending is on
a strong track due to corporate restructuring, and the export picture remains
positive despite the problems in Asia. Consensus earnings estimates for Europe
are better on average than for the rest of the world.
We emphasize stock selection with a secondary focus on country selection. Our
stock selection process ranks stocks daily across earnings growth, cash flow,
expectations, traditional value and technical measures. We customize stock
selection by market, based on which attributes are most predictive of excess
return within each country. For portfolio construction, we systematically
balance the expected returns of stocks with risk and country constraints. We
combine expectations with our proprietary country ratings to determine optimal
stock and country target weights.
4
<PAGE>
We will continue to overweight Europe and underweight Asia for the Fund until
we see signs of a bottom in earnings estimate revision and relative strength
indicators in the Asian countries. The Fund's exposure to emerging markets was
minimal over the period. The Fund is well diversified across countries and
industries.
Overall, the Fund's estimated EPS growth rate is 16.4%, higher than the 13.7%
estimate for the MSCI EAFE Index. The estimated p/e ratio is 12.9x,
significantly lower than the 21.5x estimate for the index. The Fund has a
growth-to-p/e ratio more attractive than that of the market.
Batterymarch Financial Management, Inc.
August 3, 1998
5
<PAGE>
Portfolio Managers' Comments
Emerging Markets Trust
The total return for the Legg Mason Emerging Markets Trust was -15.3%(1) for
the six months ended June 30, 1998, compared with -18.9% for the Morgan Stanley
Capital International Emerging Markets Free ("MSCI EMF") Index. While absolute
returns were disappointing, the Fund slightly outperformed the Lipper Analytical
Services, Inc. ("Lipper") emerging markets average's total return of -15.6%.
Over the longer-term, the Fund has also performed above the index. The Fund's
average annual total return for the two years ended June 30, 1998, was -8.6%
compared with -17.1% for the index. The Fund has also performed better than the
Lipper average of -11.0%.
Stock selection overall benefited the Fund for the six months ended June 30,
1998. The portfolio was underweighted in Asia, where the regional index
return(2) was particularly weak at -22.4%. The Fund has favored China and Hong
Kong; good stock selection in those markets helped the relative return.
Stock selection in Latin America was positive, particularly in Brazil. The
Fund's largest weightings in the region are in Brazil and Mexico; Brazil
outperformed the region while Mexico lagged. The Fund also benefited from
investments in the MSCI EMF region of Europe, the Middle East and Africa.
Emerging markets have lived up to their reputation for volatility, and returns
have been more than disappointing. Emerging market returns were positive in the
first quarter, driven by an Asian rally, and significantly down in the second,
fueled by negative sentiment over concerns ranging from the economic recovery in
Japan and Asia to currency destabilization in Russia. Money flows and investor
sentiment contributed heavily to short-term market declines. These short-term,
emotional reactions should eventually prove rewarding for long-term investors.
Looking ahead, the investment debate continues to turn on how much exposure
Southeast Asia warrants. If the experience of Mexico in 1995 provides any
guidance, Asian markets may remain directionless for two years. It is still not
clear that all Asian governments are committed to improving the conditions of
their finance systems.
Valuations in Latin America, at their customary discount to other emerging
markets, appear compelling when combined with expectations for continued
economic and corporate earnings growth. In Brazil, valuations are particularly
attractive as the market is trading at only 7.5x forward earnings, and earnings
growth of 15% to 20% is still expected this year and next. While Mexico remains
among the region's--and the world's--strongest economies, the equity market
continues to feel the pressure of low oil prices.
The Emerging Markets Team is finding more attractive stocks today throughout
emerging markets than at any time since the Mexican peso crisis, both for
prospective growth and on valuations. However, the core problems in Asia require
painful and disciplined solutions, particularly in the banking sector. As such,
we continue to focus the portfolio on high quality holdings, in the most solid
countries and sectors.
6
<PAGE>
Our investment strategy seeks quality growth stocks at attractive valuations.
In selecting stocks, we research our universe of stocks for attractive growth
opportunities at reasonable valuations and use proprietary measures of growth
and valuation that we tailor to each market. We use both fundamental analysis
(review of management, competitive resources, market position and financial
condition to develop qualitative stock opinions) and quantitative valuation
(earnings expectations, growth, valuation and technical factors).
The Fund's estimated EPS growth rate is 23.9% compared with 19.4% for the MSCI
EMF Index and the Fund's estimated p/e ratio is 8.0x compared with 10.9x for the
market. Thus, the Fund's growth-to-p/e ratio is well above that of the market.
The Fund is well diversified across industry sectors and invested in 30 markets.
Batterymarch Financial Management, Inc.
August 3, 1998
- ---------
(1) Excluding the 2% redemption fee assessed on shares redeemed within one year
of purchase.
(2) MSCI EMF Asia Index
7
<PAGE>
Performance Information
Legg Mason Global Trust, Inc.
TOTAL RETURN FOR ONE, FIVE YEARS AND LIFE OF FUNDS, AS OF JUNE 30, 1998
The returns shown are based on historical results and are not intended to
indicate future performance. Total return measures investment performance in
terms of appreciation or depreciation in a portfolio's net assets per share,
plus dividends and any capital gain distributions. The investment return and
principal value of an investment in each of these Funds will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than
their original cost. Average annual returns tend to smooth out variations in
a Fund's return, so they differ from actual year-to-year results. No
adjustment has been made for any income taxes payable by shareholders.
The Funds' total returns as of June 30, 1998 were as follows:
<TABLE>
<CAPTION>
Global International Emerging
Government Equity Markets
Trust(A) Trust(B) Trust(C,D)
- ------------------------------------------------------------------------------------
<S><C>
Average Annual Total Return
One Year +0.48% +5.73% -34.42%
Five Years +6.62 N.A. N.A.
Life of Fund +6.36 +13.08 -8.13
Cumulative Total Return
One Year +0.48% +5.73% -34.42%
Five Years +37.76 N.A. N.A.
Life of Fund +37.90 +51.33 -16.27
- ------------------------------------------------------------------------------------
</TABLE>
(A) Inception of Global Government Trust -- April 15, 1993
(B) Inception of International Equity Trust -- February 17, 1995
(C) Inception of Emerging Markets Trust -- May 28, 1996
(D) Returns do not include the 2.0% redemption fee assessed on shares redeemed
within twelve months of purchase.
8
<PAGE>
Industry Diversification
Legg Mason Global Trust, Inc.
June 30, 1998 (Unaudited)
International Equity Trust
<TABLE>
<CAPTION>
% of Net Market
Assets Value
- -----------------------------------------------------
(000)
<S><C>
Aerospace 1.5% $ 4,393
Agriculture/Food 0.8 2,193
Air Transport 1.5 4,279
Aluminum 0.2 529
Banks 8.7 24,862
Business Machines 0.9 2,591
Chemicals 1.4 4,132
Construction 6.7 19,077
Consumer Durables 0.7 1,918
Containers 0.5 1,303
Drugs/Medicine 0.2 728
Electric Utilities 0.4 1,247
Electronics 5.2 14,761
Finance 19.1 54,652
Food, Beverage and Tobacco 2.3 6,560
Gas Utilities 1.2 3,530
Health (Non-Drug) 0.3 794
Hotel/Restaurant N.M. 89
Insurance 6.8 19,366
Iron & Steel 1.2 3,322
Miscellaneous 0.4 1,220
Motor Vehicles 8.6 24,513
Non-Ferrous Metals 3.1 9,001
Oil Refining/Distribution 2.1 5,977
Oil Service 1.6 4,486
Paper 1.0 2,936
Photo/Optical 0.9 2,599
Producer Goods 1.1 3,186
Publishing 0.6 1,704
Railroads/Transit N.M. 33
Real Property 0.6 1,709
Retail (Non-Food) 0.4 1,133
Services 4.1 11,760
Telecommunications 9.2 26,266
Tire & Rubber 1.2 3,394
Trucking/Freight 3.1 8,872
Water Transport 0.2 563
Short-term Investments 2.1 6,153
----- --------
Total Investment Portfolio 99.9 285,831
Other Assets Less Liabilities 0.1 229
----- --------
NET ASSETS 100.0% $286,060
===== ========
</TABLE>
N.M. Not meaningful
Emerging Markets Trust
<TABLE>
<CAPTION>
% of Net Market
Assets Value
- -----------------------------------------------------
(000)
<S><C>
Aerospace 0.8% $ 452
Agriculture/Food 1.0 564
Air Transport 0.9 529
Apparel/Textiles 1.6 950
Banks 8.1 4,654
Business Machines 3.1 1,775
Chemicals 1.6 903
Coal & Uranium 0.5 269
Construction 5.7 3,297
Consumer Durables 3.0 1,747
Domestic Oil Reserves 2.5 1,468
Drugs/Medicine 1.4 800
Electric Utilities 6.1 3,516
Electronics 1.9 1,092
Finance 4.1 2,345
Food, Beverage and Tobacco 6.6 3,784
Gas Utilities 1.0 552
Hotel/Restaurant 0.5 278
Insurance 1.4 789
Iron & Steel 4.5 2,607
Media 1.7 980
Miscellaneous 8.6 4,979
Motor Vehicles 3.4 1,956
Non-Ferrous Metals 0.1 56
Oil Service 1.7 1,011
Precious Metals 0.7 425
Producer Goods 1.2 700
Real Property 0.6 357
Retail (Non-Food) 1.7 977
Services 0.3 167
Telecommunications 19.9 11,491
Water Transport 0.5 286
Short-term Investments 2.3 1,313
----- -------
Total Investment Portfolio 99.0 57,069
Other Assets Less Liabilities 1.0 568
----- -------
NET ASSETS 100.0% $57,637
===== =======
</TABLE>
9
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
June 30, 1998 (Unaudited)
(Amounts in Thousands)
Global Government Trust
<TABLE>
<CAPTION>
Maturity
Rate Date Currency Par Value
- -------------------------------------------------------------------------------------------
<S><C>
Long-term Debt Securities -- 93.2%
Australian Dollar -- 1.5%
Commonwealth of Australia 7.50% 9/15/09 AUD 2,600 $ 1,866
--------
British Sterling -- 14.8%
Bayerische Hypotheken Bank 7% 2/25/00 GBP 880 1,452
Daimler-Benz UK, PLC 7% 2/25/00 500 825
Harvard University 6.875% 2/25/00 550 907
Lloyd's Bank PLC 9.625% 4/6/23 900 2,047
NTL, Inc. 0% 4/1/08 1,500 1,509(B,C)
United Kingdom Treasury Stock 7% 6/7/02 2,350 3,989
United Kingdom Treasury Stock 8% 6/7/21 900 1,954
United Kingdom Treasury Stock 6% 12/7/28 2,200 3,983
Welcome Break Financial PLC 8.284% 9/1/17 800 1,534
--------
18,200
--------
Canadian Dollar -- 1.8%
Shaw Communications, Inc. 8.54% 9/30/27 CAD 3,000 2,182
--------
Danish Krone -- 3.0%
Unikredit Realkredit 6% 10/1/29 DKK 25,756 3,635
--------
European Currency Unit -- 1.0%
Cellular Communications
International, Inc. 0% 4/1/05 ECU 1,600 1,265(B,C)
--------
German Deutschmark -- 9.3%
Deutsche Bundesrepublik 6% 7/4/07 9,800 5,914
Esprit Telecom Group plc 11.50% 12/15/07 1,000 568
Geberit International SA 10.125% 4/15/07 1,000 643
German Unity Fund 8.50% 2/20/01 DEM 5,900 3,620
Netia Holdings, B.V. 0% 11/1/07 1,650 608(B,C)
--------
11,353
--------
Greek Drachma -- 1.4%
Republic of Greece 8.90% 3/21/04 GRD 500,000 1,669
--------
Hungarian Forint -- 1.0%
Government of Hungary 16% 4/12/00 HUF 274,000 1,261
--------
Italian Lira -- 13.9%
Buoni del Tesoro Poliennali 8.50% 8/1/99 ITL 15,700,000 10,908
Buoni del Tesoro Poliennali 4.75% 5/1/03 11,000,000 6,210
--------
17,118
--------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Maturity
Rate Date Currency Par Value
- -------------------------------------------------------------------------------------------
<S><C>
Polish Zloty -- 1.1%
Government of Poland 14% 6/12/00 PLN 5,000 $ 1,323
--------
South African Rand -- 1.7%
Republic of South Africa 13% 8/31/10 ZAR 13,900 2,069
--------
Spanish Peseta -- 1.9%
Kingdom of Spain 6% 1/31/29 ESP 350,000 2,359
--------
Swedish Krona -- 2.9%
Kingdom of Sweden 13% 6/15/01 SEK 23,000 3,557
--------
United States Dollar -- 37.9%
Corporate -- 2.2%
Cathay International Ltd. 13% 4/15/08 USD 750 652(F)
Globo Communicacoes e Participatos 10.625% 12/5/08 650 582(F)
IBJ Preferred Capital Corp. LLC 8.79% 12/29/49 500 457(B,C,F)
Interamericas Communications 14% 10/27/07 500 485(B,F)
SBTreasury Company LLC 9.40% 12/29/49 500 497(B,C,F)
--------
2,673
--------
Foreign Government -- 13.4%
Kingdom of Morocco 4.25% 1/1/09 6,000 5,145(F)
Petroleos Mexicanos 8.85% 9/15/07 2,750 2,640(F)
Republic of Brazil 6.875% 1/1/01 1,120 1,084(A,F)
Republic of Brazil 8% 4/15/14 4,641 3,330(D,F)
Republic of South Korea 8.875% 4/15/08 1,000 907(A,F)
United Mexican States 11.375% 9/15/16 3,000 3,326(F)
--------
16,432
--------
U.S. Government Obligations -- 22.3%
United States Treasury Notes 6.125% 8/15/07 17,950 18,676
United States Treasury Bonds 6% 2/15/26 5,000 5,202
United States Treasury Bonds 6.125% 11/15/27 3,300 3,536
--------
27,414
--------
Total Long-term Debt Securities (Identified Cost -- $113,168) 114,376
- ------------------------------------------------------------------------------------------
Short-term Investments -- 4.8%
Corporate -- 0.5%
ING Bank N.V.
Libor/Philippine T-Bill Note 6.6992% 2/12/99 600 620(A,E,F)
--------
</TABLE>
11
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
Global Government Trust -- Continued
<TABLE>
<CAPTION>
Maturity
Rate Date Currency Par Value
- -------------------------------------------------------------------------------------------
<S><C>
Italian Lira -- 1.2%
Buoni del Tesoro Poliennali 8.5% 8/01/99 ITL 2,500,000 $ 1,459
--------
Repurchase Agreements -- 3.1%
J.P. Morgan Securities, Inc.
5.70%, dated 6/30/98, to be repurchased at $3,742 on 7/1/98
(Collateral: $3,595 Fannie Mae Medium-term Notes,
6.47% due 8/13/07, value $3,908) USD 3,741 3,741
--------
<CAPTION>
Actual
Contracts
---------
<S><C>
Options Purchased -- N.M.
Government of Japan #202 Euro Call
July 98, Strike Price $104.978 JPY 3,000 16
Republic of South Africa #153 Euro Put
July 98, Strike Price $15.25 ZAR 28 20
--------
36
--------
Total Short-term Investments (Identified Cost -- $5,824) 5,856
- ------------------------------------------------------------------------------------------
Total Investments -- 98.0% (Identified Cost -- $118,992) 120,232
Other Assets Less Liabilities -- 2.0% 2,415
--------
Net assets consisting of:
Accumulated paid-in capital applicable to 12,812
shares outstanding $129,969
Overdistributions of net investment income (5,024)
Accumulated net realized loss on investments and currencies (3,588)
Unrealized appreciation of investments and currency transactions 1,290
--------
Net assets -- 100.0% $122,647
========
Net asset value per share $9.57
========
</TABLE>
- --------------------------------------------------------------------------------
(A) Indexed Security -- The rate of interest earned on each security is tied to
the London Interbank Offered Rate (LIBOR). The coupon rate for each is the
rate as of June 30, 1998.
(B) Rule 144a Security -- A security purchased pursuant to Rule 144a under the
Securities Act of 1933 which may not be resold subject to that rule except
to qualified institutional buyers.
(C) Stepped coupon security -- A bond or preferred stock which amortizes to par
by a specific date at which time it begins to accrue interest or pay
dividends.
(D) Front Loaded Interest Reduction Bond (FLIRB) -- Security pays a portion of
the coupon in cash and a portion is capitalized as an increase in par value.
(E) Total maturity value is linked to the value of the Phillipine T-Bill and
Phillipine Peso.
(F) Yankee Bond -- Dollar-denominated bond issued in the U.S. by foreign
entities.
N.M. Not meaningful
See notes to financial statements.
12
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
June 30, 1998 (Unaudited)
(Amounts in Thousands)
International Equity Trust
<TABLE>
<CAPTION>
Shares/Par Value
- ------------------------------------------------------------------------------------------------
<S><C>
Common Stocks and Equity Interests -- 96.0%
Argentina -- 0.7%
Telefonica de Argentina S.A. 644 $ 2,086
--------
Australia -- 2.8%
Amcor Ltd. 193 847
Australia & New Zealand Bank Group Ltd. 422 2,919
CSR Limited 265 767
GIO Australia Holdings Limited 218 561
Goodman Fielder Limited 481 702
Orica Limited 102 604
Westpac Banking Corporation Ltd. 242 1,477
--------
7,877
--------
Austria -- 0.9%
OMV AG 20 2,614
--------
Belgium -- 3.8%
Compagnie Belge de Participations Paribas SA 37 2,570
Cie Financiere Europeene et d'Outre-Mer SA 3 503
Fortis AG 2 613
Groupe Bruxelles Lambert SA 5 1,090
Kredietbank NV 32 2,865
Societe Generale de Belgique 13 2,203
Solvay 13 1,063
--------
10,907
--------
Brazil -- 0.1%
Companhia Paulista de Forca e Luz-- CPFL 1,900 194(A)
--------
Chile -- 0.4%
Enersis S.A. ADR 50 1,234
--------
Denmark -- 1.2%
Ratin A/S 10 2,065(A)
SAS Danmark A/S 32 633
Sophus Berendsen A/S 10 405
Superfos A/S 12 323
--------
3,426
--------
Finland -- 1.8%
Kesko Oyj 55 868
Metsa-Serla Oyj 216 2,093
Rautaruukki OY 245 1,877
The Rauma Group 18 361
--------
5,199
--------
</TABLE>
13
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
International Equity Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ------------------------------------------------------------------------------------------------
<S><C>
France -- 9.6%
Alcatel Alsthom 4 $ 774
Bollore Technologies SA 7 1,258
Ciments Francais 28 1,653
Coflexip SA 11 1,334
Compagnie Generale de Geophysique SA 7 1,071(A)
Compagnie Generale d'Industrie et de Participations 3 1,480
Equipements et Composants pour l'Industrie Autombile 4 1,112
Eridania Beghin-Say SA 5 1,104
Groupe GTM 13 1,309
Lafarge SA 33 3,411
Moulinex 67 1,741(A)
Pechiney SA 8 306
PSA Peugeot Citroen 18 3,871
Renault SA 78 4,443
Total SA 16 2,028
Vallourec SA 7 559
--------
27,454
--------
Germany -- 14.3%
Bankgesellschaft Berlin AG 22 456
BASF AG 40 1,878
Bayerische Motoren Werke (BMW)AG 2 2,297
Bayerische Vereinsbank AG 47 4,030
BHF-Bank AG 17 648
Continental AG 82 2,581
Daimler-Benz AG 9 881
Daimler-Benz AG - Rights 9 10(A)
Deutsche Bank AG 55 4,688
Deutsche Lufthansa AG 145 3,648
Deutsche Pfandbrief-und Hypothekenbank AG 20 1,629
Deutsche Telekom N.M. 1
Dresdner Bank AG 71 3,828
Fried Krupp AG Hoesch-Krupp 8 1,446
IWKA AG 2 434
Preussag AG 8 3,045
SKW Trostberg 11 388
Thyssen AG 14 3,474
Volkswagen AG 6 5,412
--------
40,774
--------
Greece -- 0.4%
Ergo Bank S.A. 14 1,203
--------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ------------------------------------------------------------------------------------------------
<S><C>
Hong Kong -- 4.5%
Champion Technology Holdings 22,572 $ 772
Cheung Kong Holdings 297 1,460
CLPHoldings Limited 732 3,335
Citic Pacific Ltd. 384 679
Dickson Concepts International Ltd. 24 33
FPB Bank Holding Company Limited 253 30
Hon Kwok Land Investment Limited 788 82
Hong Kong Telecommunications Ltd. 1,899 3,567
HSBC Holdings plc 81 1,993
Innovative International Holdings 698 131
Innovative International Holdings - Warrants 70 N.M.(A)
Peregrine Investment Holdings Limited 256 N.M.(A,B)
Smartone Telecommunications 151 368
Sun Hung Kai Properties Ltd. 39 166
Wing Hang Bank Ltd. 131 175
Wong's International Holdings Ltd. 501 98
Wong's International Holdings Ltd. - Warrants 100 2(A)
--------
12,891
--------
Ireland -- 2.3%
Allied Irish Banks plc 202 2,914
Bank of Ireland 92 1,879
Irish Life Plc 67 620
Jefferson Smurfit Group Plc 431 1,283
--------
6,696
--------
Israel -- 0.5%
Bezeq Israeli Telecommunication Corporation Ltd. 436 1,388
--------
Italy -- 6.2%
Autostrada Torino-Milano S.p.A 11 202
Banca Agricola Mantovana 50 790
Banca Commerciale Italiana 199 1,192
Banca Popolare di Bergamo Credito Varesino SpA 123 2,526
Banca Popolare di Brescia 78 1,469
ENI 353 2,316
Fiat SpA 109 479
Istituto Mobiliare Italiano S.p.A 22 345
Italmobiliare 54 1,626
Magneti Marelli 164 361
Mondadori (Arnoldo) Editore S.p.A 61 715
Telecom Italia SpA 785 5,785
--------
17,806
--------
</TABLE>
15
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
International Equity Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ------------------------------------------------------------------------------------------------
<S><C>
Japan -- 6.2%
Canon Incorporated 48 $ 1,094
Citizen Watch Company 208 1,722
Eisai Company Ltd. N.M. 2
Furukawa Electric 572 1,932
Hitachi Cable 105 507
Iwate (Bank of) Limited 18 864
Jaccs Company 99 524
Katokichi Company 3 36
Kawasaki Kisen Kaisha Ltd. 671 1,165
Kishu Paper Company 10 22
Konica Corporation 409 1,849
Kyowa Hakko Kogyo Co. Ltd. 183 728
Marubeni Corporation 118 236
Maruzen Showa Unyu Co. 6 12
Mitsui Trust & Banking 415 982
Nichicon Corporation 43 482
Olympus Optical Co., Ltd. 53 462
Ricoh Company 110 1,162
Rohm Company 14 1,443
Sony Corporation 10 864
Sumitomo Trust & Banking Corporation 53 238
TDK Corporation 19 1,408
--------
17,734
--------
Malaysia -- 0.1%
Malayan Cement Berhad 507 165
--------
Mexico -- 0.3%
Desc S.A. de C.V. 32 162
Telefonos de Mexico SA 280 672
--------
834
--------
Netherlands -- 6.7%
ABN Amro Holding N.V. 29 684
ASR Verzekeringsgroep N.V. 5 382
Aegon N.V. 36 3,161
Fortis Amev NV 7 425
Fugro N.V. 12 494
Hollandsche Beton Groep N.V. 21 438
ING Groep NV 82 5,363
ING Groep NV - Coupons 42 27(A)
Internatio-Muller N.V. 45 1,524
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ------------------------------------------------------------------------------------------------
<S><C>
Netherlands -- continued
Koninklijke Ahrend NV 10 $ 343
Koninklijke Ahrend NV - Coupons 10 6(A)
Koninklijke Van Ommeren N.V. 43 1,819
NBM-Amstelland N.V. 37 1,153
NBM-Amstelland N.V. - Coupons 31 22(A)
Roto Smeets D Boerd 17 778
Volker Wessels Stevin N.V. 84 2,482
--------
19,101
--------
New Zealand -- 1.1%
Telecom Corporation of New Zealand Limited 731 3,020
--------
Norway -- 2.1%
Aker RGI ASA - B Shares 4 51
Den Norske Bank A/S 479 2,513
Ekornes ASA 14 169
Hafslund ASA 4 15
NCL Holdings 250 1,238(A)
Nycomed Amersham plc 105 779
Saga Petroleum AS 71 1,099
--------
5,864
--------
Portugual -- 1.8%
Cimpor-Cimentos de Portugal, SGPS, SA 36 1,248
Portugal Telecom S.A. 59 3,111
Semapa-Sociedade de Investimento e Gestao, SGPS, SA 33 839
--------
5,198
--------
Singapore -- 0.2%
Creative Technology Limited 32 390(A)
Oversea-Chinese Banking Corporation Ltd. 88 300
--------
690
--------
South Korea -- 0.3%
Daewoo Corporation 119 285
Samsung Heavy Industries 113 554(A)
--------
839
--------
Spain -- 5.4%
Banco Bilbao Vizcaya 135 6,923
Banco Central Hispanoamericano 44 1,389
Corporacion Bancaria de Espana SA 110 2,477
Iberdrola S.A. 140 2,267
Tabacalera SA 89 1,812
Telefonica de Espana 15 717
--------
15,585
--------
</TABLE>
17
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
International Equity Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- ------------------------------------------------------------------------------------------------
<S><C>
Sweden -- 2.9%
Electrolux AB 130 $ 2,230
ForeningsSparbanken AB 26 788
Granges AB 12 223(A)
Svedala Industri 40 930
Volvo AB 139 4,145
--------
8,316
--------
Switzerland -- 5.1%
Ascom Holding AG 1 1,267(A)
Credit Suisse Group 11 2,407
Danzas Holding AG 1 216
Fotolabo S.A. 1 296
Georg Fischer AG N.M. 156
Holderbank Financiere Glarus AG 2 2,861
Kuoni Reisen Holdings AG N.M. 89
Rieter Holdings Ltd. 2 1,456
Schweizerische Ruckvericherungs-Gesellschaft 2 5,801
--------
14,549
--------
Turkey -- 0.6%
Yapi ve Kredi Bankasi, A.S. 27,531 703
Tofas Oto Ticaret A.S. 25,486 1,077
--------
1,780
--------
United Kingdom -- 13.7%
Asda Group plc 237 814
Bank of Scotland 181 2,033
Barratt Developments PLC 238 1,048
Bass PLC 174 3,255
British Aerospace PLC 144 1,100
British Telecommunications plc 250 3,089
Daily Mail and General Trust 5 208
English China Clays plc 159 550
Ladbroke Group plc 508 2,792
Lex Service plc 215 1,791
Lloyds TSB Group plc 515 7,205
Misys plc 24 1,374
National Westminster Bank PLC 155 2,779
PowerGen plc 168 2,323
Prudential Corporation 232 3,064
Rugby Group plc 89 165
Scottish & Newcastle PLC 103 1,454
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- ------------------------------------------------------------------------------------------------
<S><C>
United Kingdom -- Continued
Wickes plc 56 $ 265(A)
WPP Group plc 585 3,833
--------
39,142
--------
Total Common Stocks and Equity Interests (Identified Cost -- $220,581) 274,566
- ------------------------------------------------------------------------------------------------
Preferred Stocks -- 1.8%
Brazil -- 0.4%
Telecomunicacoes Brasileiras 11,000 1,197
--------
Germany -- 0.3%
Rheinmetall AG 28 802
--------
Italy -- 1.1%
Banca Nazionale del Lavoro (BNL) 98 2,592
IFI Istituto Finanziario 24 508
--------
3,100
--------
United Kingdom -- N.M.
Wessex Water plc 14 13
--------
Total Preferred Stocks (Identified Cost-- $4,640) 5,112
- ------------------------------------------------------------------------------------------------
Repurchase Agreements -- 2.1%
Lehman Brothers, Inc.
5.95%, dated 6/30/98, to be repurchased at $6,154 on 7/1/98
(Collateral: $6,398 Freddie Mac Mortgage-backed securities,
6% due 5/1/13, value $6,363)
(Identified Cost-- $6,153) $ 6,153 6,153
- ------------------------------------------------------------------------------------------------
Total Investments-- 99.9% (Identified Cost-- $231,374) 285,831
Other Assets Less Liabilities-- 0.1% 229
--------
Net assets consisting of:
Accumulated paid-in capital applicable to:
20,561 Primary Shares outstanding $240,246
4 Navigator Shares outstanding 50
Overdistributions of net investment income (257)
Accumulated net realized loss on investments and currency
transactions (8,092)
Unrealized appreciation of investments and currency transactions 54,113
--------
Net assets -- 100.0% $286,060
========
Net asset value per share:
Primary Class $13.91
======
Navigator Class $13.93
======
- ------------------------------------------------------------------------------------------------
</TABLE>
(A) Non-income producing
(B) Issuer is in bankruptcy.
N.M. Not meaningful
See notes to financial statements.
19
<PAGE>
Statement of Net Assets
Legg Mason Global Trust, Inc.
June 30, 1998 (Unaudited)
(Amounts in Thousands)
Emerging Markets Trust
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------
<S><C>
Common Stocks and Equity Interests -- 89.5%
Argentina -- 3.7%
Banco Frances del Rio de la Plata S.A. ADR 25 $ 564
IRSA Inversiones y Representaciones S.A. 121 357
Quilmes Industrial SA ADR 61 593
YPFSociedad Anonima ADR 21 628
-------
2,142
-------
Brazil -- 9.7%
Brazil Realty S.A. GDS 16 330(B)
Centrais Electricas Braseiras S/A 14,733 433
Companhia Brasileira de Distribuicao Grupo Pao de Acucar ADR 16 362
Companhia de Eletricidade do Estado do Rio de Janeiro 980,900 483(A)
Companhia Energetica de Minas ADR 17 530
Gerdau Metalurgica S/A 79 2
Rossi Residencial S.A. GDS 36 165(B)
Telecomunicacoes Brasileiras S/A ADR 15 1,662
Telecomunicacoes Brasileiras S/A 13,847 1,102
Uni<o de Bancos Brasileiros SA GDS 19 549
-------
5,618
-------
Chile -- 2.0%
Chilectra S.A. ADR 26 554
Linea Aerea Nacional Chile SA ADR 51 415(A)
Sociedad Quimica y Minera de Chile ADR 6 214
-------
1,183
-------
China -- 6.7%
Bengang Steel Plates Co., Ltd. 1,000 174(A)
Brilliance China Automotive Holdings, Ltd. 160 1,680
China International Marine Containers Ltd. 220 114
Guangdong Kelon Electric Holding 350 276
Heilongjiang Electric Power Co. Ltd. 375 143(A)
Huaneng Power International, Inc. ADR 22 302(A)
Shandong Huaneng Power Company Ltd. ADR 30 161
Shenzhen Expressway Company Limited 1,500 277(B)
Shenzhen Konka Electronics Group Limited 227 204
Zhejiang Southeast Electric Power Co., Ltd. 1,850 518
-------
3,849
-------
Croatia -- 0.7%
Pliva d.d. GDR 25 406(B)
-------
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------
<S><C>
Czech Republic -- 0.4%
Ceske Radiokomunikace GDR 11 $ 228(A,B)
-------
Egypt -- 2.1%
Arabian International Construction 8 338(A)
Egypt Investment Company Ltd. 14 199(A,B)
International Food Egypt 5 94(A)
Miraco International B.V. 2 50(A)
Orascom Project for Development N.M. 218(A)
Oriental Weavers Co. 14 291(A)
-------
1,190
-------
Estonia -- 0.1%
Eesti Uhispank GDR 8 60(A,B)
-------
Ghana -- 0.5%
Ashanti Goldfields Company Ltd. GDR 35 284
-------
Greece -- 3.1%
Hellenic Telecommunication Organization S.A. 38 964
Heracles General Cement S.A. 34 803
-------
1,767
-------
Hong Kong -- 2.2%
China Food Holdings Ltd. 500 132
China Pharmaceutical Enterprise and Investment Corporation
Limited 2,249 177
China Telecom (Hong Kong) Limited 100 174(A)
Guangdong Brewery Holdings Limited 1,600 122(A)
Legend Holdings Limited 750 225(A)
Pacific Ports Company Ltd. 750 105(A)
Shum Yip Investment Limited 750 187
Vanda Systems &Communication Holdings Ltd. 700 126
-------
1,248
-------
Hungary -- 1.7%
Magyar Olaj Es Gazipari KT 20 537
Magyar Tavkozlesi Rt. ADR 8 236
Richter Gedeon Rt. 3 217
-------
990
-------
India -- 3.4%
ITC Limited GDR 57 1,277
Reliance Industries GDR 100 660
-------
1,937
-------
</TABLE>
21
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
Emerging Markets Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------
<S><C>
Israel -- 3.8%
Bank Hapoalim 79 $ 239(A)
Bank Leumi Le - Israel 83 165
Formula Systems (1985) Ltd. 13 451(A)
Makhteshim Chemical Works Limited 149 473(A)
NICE - Systems Ltd. ADR 12 437(A)
Orbotech, Ltd. 12 429(A)
-------
2,194
-------
Kazakhstan -- 1.0%
Regent Central Asia Fund 97 580(A)
-------
Malaysia -- 2.8%
Golden Hope Plantations Bhd 210 192
Highlands & Lowlands Bhd 306 216
Kumpulan Guthrie Berhad 424 245
Malakoff Berhad 81 149
Petronas Gas Berhad 116 215
Rothmans of Pall Mall (Malaysia) Berhad 34 236
Telekom Malaysia Bhd 145 245
Tenaga Nasional Berhad 102 123
-------
1,621
-------
Mexico -- 13.8%
Biper S.A. de C.V. 1,252 497(A)
Cemex SA de CV 179 673(A)
Corporation GEO, S.A. de C.V. 117 652(A)
Empaques Ponderosa, S.A. de C.V. 865 539(A)
Fomento Economico Mexicana, SA de C.V. ADR 20 627(A)
Grupo Financiero Banamex Accival, SA de CV 285 555(A)
Grupo Financiero Bancomer, S.A. de C.V. 1,140 425
Grupo Televisa SAGDR 20 753(A)
Organizacion Soriana SA de CV 238 678
Panamerican Beverages, Inc. 18 569
Telefonos de Mexico SA 652 1,564
Tubos de Acero de Mexico SA ADR 31 401
-------
7,933
-------
Namibia -- 0.6%
Namibian Minerals Corporation 145 328(A)
-------
Philippines -- 0.1%
Manila Electric Company 25 67
-------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------
<S><C>
Poland -- 0.4%
Mostostal-Warszawa SAGDR 32 $ 220(A,B)
Zaklady Plyt Wiorowych Grajewo 1 37(A)
-------
257
-------
Romania -- 0.7%
Societe Generale Romania Fund 5 403(A)
-------
Russia -- 1.6%
AO Surgutneftegaz ADR 71 284
AO Taftneft ADR 38 299(B)
Lukoil Holding ADR 6 185
Unified Energy Systems GDR 13 170(A)
-------
938
-------
Saudi Arabia -- 1.6%
Saudi Arabian Investment Fund 125 953(A)
-------
South Africa -- 7.0%
Anglo American Corporation of South Africa Limited 14 462
Anglogold Limited 16 651
Billiton Plc 28 56(A)
C.G. Smith Limited 60 166
Driefontein Consolidated 63 326
Rembrandt Group Limited 121 755
Sasol Limited 46 268
Southern Africa Fund, Inc. 99 1,240
Western Area Gold Mining 30 96
-------
4,020
-------
South Korea -- 2.3%
Daewoo Electronic Components Co. 30 79
Hana Bank GDR 32 114(A)
Kookmin Bank Ltd. 11 42
Kookmin Bank Ltd. GDS 29 111(A,B)
Korea Electric Power Corporation 20 213
LG Insurance Company LTD. 8 158
Pohang Iron & Steel Company Ltd. 3 73
SK Corporation GDR 63 74
SK Telecom Co. Ltd. N.M. 62
Samsung Electronics Co. 7 217
Samsung Fire & Marine Insurance 1 187
-------
1,330
-------
Spain -- 0.5%
Melia Inversiones Americanas, N.V. 6 277(A)
-------
</TABLE>
23
<PAGE>
Statement of Net Assets -- Continued
Legg Mason Global Trust, Inc.
Emerging Markets Trust -- Continued
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------
<S><C>
Taiwan -- 3.1%
Asia Cement Corporation GDS 18 $ 163(B)
Asustek Computer Inc. GDR 55 435(A,B)
Cathay Life Insurance Co., Ltd. 54 165
China Development Corporation 60 139
China Steel Corporation GDR 15 190(B)
D-Link Corporation 45 103
Evergreen Marine Corporation GDR 11 90(B)
President Enterprises GDS 11 95(A,B)
Standard Foods Taiwan Limited 55 94(A)
Taiwan Semiconductor Manufacturing Company 28 57(A)
Teco Electric & Machinery GDR 23 193(A,B)
Yang Ming Marine Transport GDR 15 93(A,B)
-------
1,817
-------
Thailand -- 1.9%
Advanced Info Service Public Co., Ltd. 50 213
Electricity Generating Public Company Limited 149 231
PTT Exploration & Production Public Company Limited 51 390(A)
Siam Cement Public Company Limited 52 251
-------
1,085
-------
Turkey -- 5.8%
Akbank T.A.S. 15,358 496
Aksigorta A.S. 4,300 279
Arcelik A.S. 8,929 419
Aselsan Askeri Elektronik A.S. 2,952 84
Borusan Birlesik Boru Fabrikalari A.S. 1,503 62
Eczacibasi Ilac Sanayi ve Ticaret A.S. 2,813 145(A)
Haci Omer Sabanci Holding A.S. 6,270 388
Klimasan Klima Sanayi ve Ticaret A.S. 2,270 345
Kordsa Kord Bezi Sanayi ve Ticaret A.S. 2,226 355
Turkiye Garanti Bankasi A.S. 3,403 157
Turkiye Is Bankasi (Isbank) 8,250 333
Yapi ve Kredi Bankasi A.S. 10,194 260
-------
3,323
-------
Ukraine -- 0.7%
Societe Generale Laden Thal Ukraine Fund 5 403(A)
-------
United States -- 4.6%
Global Telesystems Holdings Ltd. 54 2,628(A)
-------
Venezuela -- 0.9%
Compania Anonima Nacional Telefonos de Venezuela ADS 20 503
-------
Total Common Stocks and Equity Interests (Identified Cost -- $60,551) 51,562
- -------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Shares/Par Value
- -------------------------------------------------------------------------------------------
<S><C>
Preferred Shares -- 7.0%
Argentina -- 1.0%
Nortel Inversora S.A. ADR 24 $ 607
-------
Brazil -- 6.0%
Banco Itau S.A. 1,100 628
Companhia Paranaense de Energia-Copel 41,300 386
Companhia Riograndense Telecom 553 603(A)
Companhia Vale do Rio Doce 7 144
Empresa Brasileira de Aeronautica, SA 25,500 422(A)
Gerdau Metalurgica S/A 10,676 341
Gerdau Siderugica SA 20,865 289
Petroleo Brasileiro S/A 3,509 652
-------
3,465
-------
Total Preferred Shares (Identified Cost-- $4,544) 4,072
- -------------------------------------------------------------------------------------------
Convertible Bond -- 0.2%
Taiwan -- 0.2%
Far Eastern Department Stores, 3%, 7/6/01 (Identified
Cost-- $145) $ 140 122
- -------------------------------------------------------------------------------------------
Repurchase Agreements -- 2.3%
Lehman Brothers, Inc.
5.95%, dated 6/30/98, to be repurchased at $1,313 on 7/1/98
(Collateral: $1,365 Freddie Mac Mortgage-backed securities,
6% due 5/1/13, value $1,358)
(Identified Cost-- $1,313) 1,313 1,313
- -------------------------------------------------------------------------------------------
Total Investments-- 99.0% (Identified Cost-- $66,553) 57,069
Other Assets Less Liabilities-- 1.0% 568
-------
Net assets consisting of:
Accumulated paid-in capital applicable to 6,914 shares
outstanding $ 77,749
Overdistributions of net investment income (85)
Accumulated net realized loss on investments and currency
transactions (10,581)
Unrealized depreciation of investments and currency
transactions (9,446)
--------
Net assets-- 100.0% $57,637
=======
Net asset value per share $8.34
=====
- -------------------------------------------------------------------------------------------
</TABLE>
(A) Non-income producing
(B) Rule 144a security -- A security purchased pursuant to Rule 144a under the
Securities Act of 1933 which may not be resold subject to that rule except
to qualified institutional buyers.
N.M. Not meaningful
See notes to financial statements.
25
<PAGE>
Statements of Operations
Legg Mason Global Trust, Inc.
(Amounts in Thousands) (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended 6/30/98
--------------------------------------
Global International Emerging
Government Equity Markets
Trust Trust Trust
- --------------------------------------------------------------------------------------------
<S><C>
Investment Income:
Interest $ 4,180 $ 197 $ 91
Dividends -- 4,421 930
Less: Foreign tax expense -- (533) (60)
------- ------- --------
Total income 4,180 4,085 961
------- ------- --------
Expenses:
Management fee 484 976 326
Distribution and service fees 484 1,301 326
Transfer agent and shareholder servicing expense 48 127 49
Audit and legal fees 34 25 24
Custodian fees 114 283 120
Directors' fees 3 3 3
Registration fees 8 18 14
Reports to shareholders 18 27 13
Organization expense 6 7 7
Other expenses 8 52 23
------- ------- --------
1,207 2,819 905
Less fees waived -- -- (91)
------- ------- --------
Total expenses, net of waivers 1,207 2,819 814
------- ------- --------
Net Investment Income 2,973 1,266 147
------- ------- --------
Net Realized and Unrealized Gain (Loss) on Investments:
Realized gain (loss) on:
Investments (1,684) (1,718) (8,839)
Foreign currency transactions (1,904) (252) (50)
------- ------- --------
(3,588) (1,970) (8,889)
------- ------- --------
Change in unrealized appreciation (depreciation) of:
Investments, options and futures 3,151 42,408 (1,871)
Assets and liabilities denominated in foreign
currencies 35 (277) 36
------- ------- --------
3,186 42,131 (1,835)
------- ------- --------
Net Realized and Unrealized Gain (Loss) on Investments (402) 40,161 (10,724)
- --------------------------------------------------------------------------------------------
Change in Net Assets Resulting from Operations $ 2,571 $41,427 $(10,577)
- --------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
26
<PAGE>
Statements of Changes in Net Assets
Legg Mason Global Trust, Inc.
(Amounts in Thousands)
<TABLE>
<CAPTION>
Global International Emerging
Government Equity Markets
Trust Trust Trust
---------------------- --------------------- -------------------
Six Months Year Six Months Year Six Months Year
Ended Ended Ended Ended Ended Ended
6/30/98 12/31/97 6/30/98 12/31/97 6/30/98 12/31/97
- ---------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
<S><C>
Change in Net Assets:
Net investment income (loss) $ 2,973 $ 8,300 $ 1,266 $ 368 $ 147 $ (424)
Net realized gain (loss) on
investments, options, futures
and foreign currency transactions (3,588) (3,888) (1,970) 15 (8,889) (1,729)
Change in unrealized appreciation
(depreciation) of investments and
assets and liabilities denominated
in foreign currencies 3,186 (7,126) 42,131 (809) (1,835) (8,793)
- ---------------------------------------------------------------------------------------------------------
Change in net assets resulting
from operations 2,571 (2,714) 41,427 (426) (10,577) (10,946)
Distributions to shareholders:
From net investment income (2,863) (7,473) -- (1,483) -- (66)
In excess of net investment income -- (641) -- -- -- --
From net realized gain on investments -- (1,553) -- (8,167) -- --
Change in net assets from Fund share
transactions:
Primary Class (13,793) (12,436) 16,928 69,805 2,912 55,108
Navigator Class -- -- 50 -- -- --
- ---------------------------------------------------------------------------------------------------------
Change in net assets (14,085) (24,817) 58,405 59,729 (7,665) 44,096
Net Assets:
Beginning of period 136,732 161,549 227,655 167,926 65,302 21,206
- ---------------------------------------------------------------------------------------------------------
End of period $122,647 $136,732 $286,060 $227,655 $ 57,637 $ 65,302
Under/(over) distributed
net investment income $ (5,024) $ (5,134) $ (257) $ (1,523) $ (85) $ (232)
- ---------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
27
<PAGE>
Financial Highlights
Legg Mason Global Trust, Inc.
Contained below is per share operating performance data for a share of
common stock outstanding, total investment return, ratios to average net assets
and other supplemental data. This information has been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
Investment Operations Distributions From:
----------------------------------------- ------------------------------------------------
Net Realized and
Unrealized Gain
(Loss) on Invest- In Excess
Net Asset Net ments, Options, Total In Excess Net of Net
Value, Investment Futures and From Net of Net Realized Realized
Beginning Income Foreign Currency Investment Investment Investment Gain on Gain on
of Period (Loss) Transactions Operations Income Income Investments Investments
- -----------------------------------------------------------------------------------------------------------------------------------
<S><C>
Global Government Trust
--Primary Class
Six Months Ended
June 30, 1998* $ 9.60 $ .18 $ .01 $ .19 $ (.22) $ -- $ -- $ --
Years Ended Dec. 31,
1997 10.41 .54 (.71) (.17) (.48) (.05) (.11) --
1996 10.33 .59 .21 .80 (.62) -- (.10) --
1995 9.54 .63 1.32 1.95 (1.16) -- -- --
1994 10.27 .57(A) (.71) (.14) (.59) -- -- --
1993(D) 10.00 .36(A) .31 .67 (.36) -- (.04) --
International Equity Trust
--Primary Class
Six Months Ended
June 30, 1998* $11.78 $ .07 $ 2.06 $ 2.13 $ -- $ -- $ -- $ --
Years Ended Dec. 31,
1997 12.09 .02 .19 .21 (.08) -- (.44) --
1996 10.70 .02(B) 1.74 1.76 (.05) -- (.32) --
1995(E) 10.00 .04(B) .77 .81 (.04) -- -- (.07)
--Navigator Class
Period Ended
June 30, 1998*(G) $14.21 $ .09 $ (.37) $ (.28) $ -- $ -- $ -- $ --
Emerging Markets Trust
--Primary Class
Six Months Ended
June 30, 1998* $ 9.85 $ .02(C) $(1.53) $(1.51) $ -- $ -- $ -- $ --
Years Ended Dec. 31,
1997 10.51 (.02)(C) (.63) (.65) (.01) -- -- --
1996(F) 10.00 (.03)(C) .57 .54 (.03) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Ratios/Supplemental Data
------------------------------------------------------------------------
Net
Net Asset Investment Average Net Assets,
Value, Expenses Income (Loss) Portfolio Commission End of
Total End of Total to Average to Average Turnover Rate Period
Distributions Period Return Net Assets Net Assets Rate Paid(H) (in thousands)
- ---------------------------------------------------------------------------------------------------------------------------------
<S><C>
Global Government Trust
--Primary Class
Six Months Ended
June 30, 1998* $ (.22) $ 9.57 1.93%(I) 1.87%(J) 4.60%(J) 299%(J) $ -- $122,647
Years Ended Dec. 31,
1997 (.64) 9.60 (1.69)% 1.86% 5.39% 241% -- 136,732
1996 (.72) 10.41 8.22% 1.86% 5.80% 172% -- 161,549
1995 (1.16) 10.33 20.80% 1.81% 5.72% 169% -- 153,954
1994 (.59) 9.54 (1.40)% 1.34%(A) 5.71%(A) 127% -- 145,415
1993(D) (.40) 10.27 6.76%(I) .27%(A,J) 5.41%(A,J) 128%(J) -- 161,072
International Equity Trust
--Primary Class
Six Months Ended
June 30, 1998* $ -- $13.91 18.08%(I) 2.17%(J) .97%(J) 69%(J) $.0058 $286,011
Years Ended Dec. 31,
1997 (.52) 11.78 1.76% 2.17% .17% 59% .0082 227,655
1996 (.37) 12.09 16.49% 2.25%(B) .21%(B) 83% .0083 167,926
1995(E) (.11) 10.70 8.11%(I) 2.25%(B,J) .52%(B,J) 58%(J) -- 65,947
--Navigator Class
Period Ended
June 30, 1998*(G) $ -- $13.93 (1.97)%(I) 1.18%(J) 4.09%(J) 69%(J) $.0058 $ 49
Emerging Markets Trust
--Primary Class
Six Months Ended
June 30, 1998* $ -- $ 8.34 (15.33)%(I) 2.50%(C,J) .45%(C,J) 69%(J) $.0029 $ 57,637
Years Ended Dec. 31,
1997 (.01) 9.85 (6.18)% 2.50%(C) (.76)%(C) 63% .0054 65,302
1996(F) (.03) 10.51 5.40%(I) 2.50%(C,J) (.68)%(C,J) 46%(J) .0061 21,206
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(A) Net of fees waived by LMFA for expenses in excess of voluntary
expense limitations of 0.2% until September 30, 1993; 0.35% until
December 31, 1993; 0.5% until January 31, 1994; 0.7% until February
28, 1994; 0.9% until March 31, 1994; 1.1% until April 30, 1994; 1.3%
until May 31, 1994; 1.5% until June 30, 1994; 1.7% until July 31,
1994; and 1.9% indefinitely. If no fees had been waived by LMFA, the
annualized ratio of expenses to average daily net assets for each
period would have been as follows: 1994, 1.82%; and 1993, 1.93%.
(B) Net of fees waived by LMFA pursuant to a voluntary expense limitation
of 2.25%. If no fees had been waived by LMFA, the annualized ratio of
expenses to average daily net assets for each period would have been
as follows: 1996, 2.32%; and 1995, 2.91%.
(C) Net of fees waived by LMFA pursuant to a voluntary expense limitation
of 2.50%. If no fees had been waived by LMFA, the annualized ratio of
expenses to average daily net assets for each period would have been
as follows: for the six months ended June 30, 1998, 2.78%; 1997,
2.86%; and 1996, 3.71%.
(D) For the period April 15,1993 (commencement of operations) to December
31, 1993.
(E) For the period February 17, 1995 (commencement of operations) to
December 31, 1995.
(F) For the period May 28, 1996 (commencement of operations) to December
31, 1996.
(G) For the period May 5, 1998 (commencement of sale of Navigator Shares)
to June 30, 1998.
(H) Pursuant to SEC regulations effective for fiscal years beginning
after September 1, 1995, this is the average commission rate paid on
securities purchased and sold by the Funds. The regulations for
average commission rates are not applicable to non-equity funds.
(I) Not annualized
(J) Annualized
* Unaudited
See notes to financial statements.
28
<PAGE>
Notes to Financial Statements
Legg Mason Global Trust, Inc.
(Amounts in Thousands) (Unaudited)
- -------------------------------------------------------------------------------
1. Significant Accounting Policies:
The Legg Mason Global Trust, Inc. ("Corporation"), consisting of the
Global Government Trust ("Global Government"), the International Equity
Trust ("International Equity"), and the Emerging Markets Trust ("Emerging
Markets") (each a "Fund"), is registered under the Investment Company Act of
1940, as amended, as an open-end, diversified investment company.
Security Valuation
Each Fund's securities are valued on the basis of market quotations or,
lacking such quotations, at fair value as determined under the guidance of
the Board of Directors. Securities for which market quotations are readily
available are valued at the last sale price of the day for a comparable
position, or, in the absence of any such sales, the last available bid price
for a comparable position. Where a security is traded on more than one
market, which may include foreign markets, the securities are generally
valued on the market considered by each Fund's adviser to be the primary
market. Each Fund will value its foreign securities in U.S. dollars on the
basis of the then-prevailing exchange rates.
Most securities held by Global Government are valued on the basis of
valuations furnished by an independent service which utilizes both
dealer-supplied valuations and electronic data processing techniques which
take into account appropriate factors such as institutional-size trading in
similar groups of securities, yield, quality, coupon rate, maturity, type of
issue, trading characteristics and other data. Fixed income securities with
60 days or less remaining to maturity are valued using the amortized cost
method, which approximates current market value.
Currency Transactions
The books and records of the Funds are maintained in U.S. dollars.
Foreign currency amounts are translated into U.S. dollars on the following
basis:
(i) market value of investment securities, assets and liabilities at the
closing daily rate of exchange, and
(ii) purchases and sales of investment securities, interest income and
expenses at the rate of exchange prevailing on the respective date of such
transactions.
The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses are reflected as a component of such
gains or losses.
Investment Income and Distributions to Shareholders
Interest income and expenses are recorded on the accrual basis. Bond
premiums are amortized using the yield-to-maturity method for financial
reporting and tax purposes. Bond discounts, other than original issue and
zero-coupon bonds, are not amortized. Dividends from net investment income
are declared and paid monthly for Global Government, and are declared and
paid annually for International Equity and Emerging Markets. Dividend income
and distributions to shareholders are allocated at the class level and are
recorded on the ex-dividend date. When available, net capital gain
distributions, which are calculated at a composite level, are declared and
paid after the end of the tax year in which the gain is realized. At June
30, 1998, there were no dividends or capital gain distributions payable for
any of the Funds.
Investment Transactions
Security transactions are recorded on the trade date. Realized gains and
losses from security transactions are reported on an identified cost basis
for both financial reporting and federal income tax purposes. At June 30,
1998, receivables for securities sold but not yet delivered and payables for
securities purchased but not yet received for each Fund were as follows:
Receivable for Payable for
Securities Sold Securities Purchased
- ---------------------------------------------------------
Global Government $ 30 $ --
International Equity 602 764
Emerging Markets 112 --
29
<PAGE>
Notes to Financial Statements -- Continued
Legg Mason Global Trust, Inc.
(Amounts in Thousands)
- -------------------------------------------------------------------------------
Deferred Organizational Expense
Deferred organizational expenses of $128 for Global Government, $71 for
International Equity, and $73 for Emerging Markets are being amortized on a
straight-line basis over 5 years beginning on the date each respective Fund
began operations.
Federal Income Taxes
No provision for federal income or excise taxes is required since each
Fund intends to continue to qualify as a regulated investment company and
distribute all of its taxable income to its shareholders.
Use of Estimates
The preparation of the financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
2. Investment Transactions:
For the six months ended June 30, 1998, investment transactions
(excluding short-term investments) were as follows:
<TABLE>
<CAPTION>
Purchases Proceeds from Sales
------------------------------ -------------------------------
U.S. Gov't Securities Other U.S. Gov't. Securities Other
- ------------------------------------------------------------------------------------
<S><C>
Global Government $37,341 $136,529 $869 $184,702
International Equity -- 103,360 -- 87,622
Emerging Markets -- 24,503 -- 21,383
</TABLE>
At June 30, 1998, cost, gross unrealized appreciation and gross
unrealized depreciation based on the cost of securities for federal income
tax purposes for each Fund were as follows:
Cost Appreciation (Depreciation)
-------------------------------------------------------------
Global Government $118,992 $ 3,328 $ (2,088)
International Equity 231,374 69,226 (14,770)
Emerging Markets 66,553 4,584 (13,955)
Emerging Markets Trust has unused capital loss carryforwards for federal
income tax purposes of $11 which expire in December 2004 and $606 which
expire in December 2005. Global Government and International Equity had no
capital loss carryforwards.
3. Repurchase Agreements:
All repurchase agreements are fully collateralized by obligations issued
by the U.S. Government or its agencies and such collateral is in the
possession of the Funds' custodian. The value of such collateral includes
accrued interest. Risks arise from the possible delay in recovery or
potential loss of rights in the collateral should the issuer of the
repurchase agreement fail financially. The Funds' investment advisers,
acting under the supervision of the Board of Directors, review the value of
the collateral and the creditworthiness of those banks and dealers with
which the Funds enter into repurchase agreements to evaluate potential
risks.
4. Options and Futures:
As part of its investment program, Global Government may utilize options
and futures. International Equity and Emerging Markets may also utilize
options and futures to limited extent. Options may be written (sold) or
purchased by these Funds. When a Fund purchases a put or call option, the
premium paid is recorded as an investment and its value is marked-to-market
daily. When a Fund writes a call or put option, an amount equal to the
premium received by the Fund is recorded as a liability and its value is
marked-to-market daily.
30
<PAGE>
- -------------------------------------------------------------------------------
When options, whether written or purchased, expire, are exercised or are
closed (by entering into a closing purchase or sale transaction), the Fund
realizes a gain or loss as described in the chart below.
<TABLE>
<S><C>
Purchased option: Impact on the Fund:
The option expires Realize a loss in the amount of the cost of the option.
The option is closed through a Realize a gain or loss depending on whether the proceeds from the
closing sale transaction closing sale transaction are greater or less than the cost of the option.
The Fund exercises a call option The cost of the security purchased through the exercise of the option
will be increased by the premium originally paid to purchase the option.
The Fund exercises a put option Realize a gain or loss from the sale of the underlying security. The
proceeds of that sale will be reduced by the premium originally paid to
purchase the put option.
Written option: Impact on the Fund:
The option expires Realize a gain equal to the amount of the premium received.
The option is closed through a Realize a gain or loss without regard to any unrealized gain or loss on
closing purchase transaction the underlying security and eliminate the option liability. The Fund will
realize a loss in this transaction if the cost of the closing purchase
exceeds the premium received when the option was written.
A written call option is exer- Realize a gain or loss from the sale of the underlying security. The
cised by the option purchaser proceeds of that sale will be increased by the premium originally
received when the option was written.
A written put option is exer- The amount of the premium originally received will reduce the cost of
cised by the option purchaser the security that the Fund purchased when the option was exercised.
</TABLE>
There were no options written during the six months ended June 30, 1998.
Upon entering into a futures contract, the Fund is required to deposit
with the broker an amount of cash or cash equivalents equal to a certain
percentage of the contract amount. This is known as the "initial margin."
Subsequent payments ("variation margin") are made or received by the Fund
each day, depending on the daily fluctuation in the value of the contract.
The daily changes in contract value are recorded as unrealized gains or
losses and the Fund recognizes a realized gain or loss when the contract is
closed. Futures contracts are valued daily at the settlement price
established by the board of trade or exchange on which they are traded.
The risk associated with purchasing options is limited to the premium
originally paid. Options written by a Fund involve, to varying degrees, risk
of loss in excess of the option value reflected in the Statement of Net
Assets. The risk in writing a covered call option is that a Fund may forego
the opportunity of profit if the market price of the underlying security
increases and the option is exercised. The risk in writing a covered put
option is that a Fund may incur a loss if the market price of the underlying
security decreases and the option is exercised. In addition, there is the
risk a Fund may not be able to enter into a closing transaction because of
an illiquid secondary market or, for over-the-counter options, because of
the counterparty's inability to perform.
The Funds enter into futures contracts as a hedge against anticipated
changes in interest rates. There are several risks in connection with the
use of futures contracts as a hedging device. Futures contracts involve, to
varying degrees, risk of loss in excess of amounts reflected in the
financial statements. The change in the value of futures contracts primarily
corresponds with the value of their underlying instruments, which may not
correlate with the change in the value of the hedged instruments. In
addition, there is the risk that a Fund may not be able to enter into a
closing transaction because of an illiquid secondary market.
There were no open futures contracts at June 30, 1998.
31
<PAGE>
Notes to Financial Statements -- Continued
Legg Mason Global Trust, Inc.
(Amounts in Thousands)
- -------------------------------------------------------------------------------
5. Financial Instruments:
Emerging Markets
Each Fund has investments in securities denominated in the currencies of
emerging market countries, as well as in securities issued by companies
located in emerging market countries and, with respect to Global Government,
by governments of emerging market countries. Future economic or political
developments could adversely affect the liquidity or value, or both, of such
securities.
Forward Currency Exchange Contracts
As part of its investment program, each Fund may utilize forward currency
exchange contracts. The nature and risks of these financial instruments and
the reasons for using them are set forth more fully in the Corporation's
Prospectus and Statement of Additional Information.
Forward foreign currency contracts are marked-to-market daily using
foreign currency exchange rates supplied by an independent pricing service.
The change in a contract's market value is recorded by a Fund as an
unrealized gain or loss. When the contract is closed or delivery is taken,
the Fund records a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it
was closed.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of the Fund's securities, but it does
establish a rate of exchange that can be achieved in the future. These
forward foreign currency contracts involve market risk in excess of amounts
reflected in the Financial Statements. Although forward foreign currency
contracts used for hedging purposes limit the risk of loss due to a decline
in the value of the hedged currency, they also limit any potential gain that
might result should the value of the currency increase. In addition, the
Funds could be exposed to risks if the counterparties to the contracts are
unable to meet the terms of their contracts. Each Fund's adviser will enter
into forward foreign currency contracts only with parties approved by the
Board of Directors because there is a risk of loss to the Funds if the
counterparties do not complete the transaction.
At June 30, 1998, open forward currency exchange contracts were as
follows:
International Equity:
Contract to
Settlement ------------------------------- Unrealized
Date Receive Deliver Gain/(Loss)
- -----------------------------------------------------------
8/10/98 USD 2,804 GBP 1,696 $ (22)
8/10/98 USD 2,806 GBP 1,738 (89)
8/10/98 GBP 3,434 USD 5,620 101
8/28/98 USD 2,881 JPY 391,152 27
8/28/98 JPY 391,152 USD 2,856 (2)
9/15/98 USD 4,300 DEM 7,741 (12)
9/15/98 USD 4,300 DEM 7,748 (15)
9/15/98 USD 5,521 DEM 9,946 (19)
9/16/98 USD 2,900 JPY 412,003 (114)
9/16/98 USD 2,760 JPY 398,757 (156)
9/16/98 JPY 810,760 USD 5,970 (40)
9/17/98 USD 2,760 CHF 4,132 11
-----
$(330)
=====
Emerging Markets:
Contract to
Settlement ------------------------------- Unrealized
Date Receive Deliver Gain/(Loss)
- -----------------------------------------------------------
9/23/98 USD 750 MYR 3,048 $42
===
32
<PAGE>
- -------------------------------------------------------------------------------
Global Government:
Contract to
Settlement ---------------------------------- Unrealized
Date Receive Deliver Gain/(Loss)
- ------------------------------------------------------------
7/29/98 DEM 14,804 USD 8,291 $ (68)
7/29/98 USD 17,092 DEM 30,357 228
7/29/98 DEM 4,752 GBP 1,600 (27)
7/29/98 DEM 5,713 SEK 25,000 35
7/29/98 DEM 5,965 ITL 5,900,000 (8)
7/29/98 DKK 24,897 USD 3,702 (73)
7/29/98 USD 3,700 DKK 24,897 71
7/29/98 GBP 14,665 USD 24,429 17
7/29/98 USD 30,408 GBP 18,372 (217)
7/29/98 ITL 16,074,875 USD 9,130 (79)
7/29/98 USD 10,685 ITL 18,612,444 204
7/29/98 JPY 4,980,298 USD 36,317 (165)
7/29/98 USD 18,365 JPY 2,539,026 (81)
7/29/98 SEK 58,225 USD 7,591 (283)
7/29/98 USD 9,665 SEK 74,070 367
8/13/98 CAD 5,639 USD 3,881 (46)
8/13/98 USD 1,881 CAD 2,732 22
8/13/98 DEM 11,009 USD 6,178 (58)
8/13/98 USD 1,569 DEM 2,808 8
8/13/98 GRD 804,269 USD 2,621 4
8/13/98 USD 2,600 GRD 804,269 (25)
8/13/98 SEK 33,470 USD 4,237 (33)
8/13/98 USD 1,197 XEU 1,085 4
8/13/98 ZAR 3,074 USD 583 (75)
8/13/98 USD 3,200 ZAR 17,001 392
9/28/98 USD 1,875 AUD 3,065 (29)
-----
$ 85
=====
6. Transactions with Affiliates:
Each Fund has a management agreement with Legg Mason Fund Adviser, Inc.
("LMFA"). Pursuant to their respective agreements, LMFA provides the Funds
with management and administrative services for which each Fund pays a fee,
computed daily and payable monthly at annual rates of each Fund's average
daily net assets as follows: Global Government and International Equity,
0.75%; and Emerging Markets, 1.00%.
LMFA has agreed to waive its fees to the extent each Fund's expenses
(exclusive of taxes, interest, brokerage and extraordinary expenses) exceed
during any month the following annual rates: 1.90% of average net assets for
Global Government; 2.25% for International Equity Primary Shares and 1.25%
for Navigator Shares; and 2.50% for Emerging Markets. Fees in excess of
these limits will be waived indefinitely for Global Government and
International Equity and through May 1, 1999 for Emerging Markets. For the
six months ended June 30, 1998, management fees of $91 were waived for
Emerging Markets. No fee waivers were necessary for Global Government or
International Equity. At June 30, 1998, amounts due to the Manager were as
follows: Global Government, $77; International Equity, $175; and Emerging
Markets, $36.
33
<PAGE>
Notes to Financial Statements -- Continued
Legg Mason Global Trust, Inc.
(Amounts in Thousands)
- -------------------------------------------------------------------------------
Western Asset Management Company ("Adviser") serves as investment adviser
to Global Government. The Adviser is responsible for the actual investment
activity of the Fund, for which LMFA pays a fee at an annual rate equal to
53 1/3% of the fee received by LMFA from Global Government.
Western Asset Global Management, Ltd. ("WAGM") serves as investment
sub-adviser to Global Government. The Adviser (not the Fund) pays WAGMa fee
at an annual rate equal to 26 2/3% of the fee received by the Adviser from
LMFA. LMFA pays WAGM a sub-administration fee at an annual rate equal to
13 1/3% of the fee received by LMFA from Global Government.
Batterymarch Financial Management, Inc. ("Batterymarch") serves as the
adviser to International Equity and Emerging Markets. Batterymarch is
responsible for the actual investment activity of these Funds. LMFA pays
Batterymarch a fee for its services at an annual rate equal to 66 2/3% of
the fee received by LMFA from International Equity and 75% of the fee
received from Emerging Markets.
Legg Mason Wood Walker, Incorporated ("Legg Mason"), a member of the New
York Stock Exchange, serves as distributor of the Funds. Legg Mason receives
an annual distribution fee of 0.50% for Global Government and 0.75% each for
International Equity and Emerging Markets, and an annual service fee of
0.25% of each Fund's average daily net assets, calculated daily and payable
monthly. At June 30, 1998, distribution and service fees due to LMFA were as
follows:Global Government, $77; International Equity, $233; and Emerging
Markets, $49.
Legg Mason also has an agreement with the Funds' transfer agent to assist
with certain of its duties. For this assistance, Legg Mason was paid the
following amounts by the transfer agent for the six months ended June 30,
1998: $14 for Global Government; $40 for International Equity; and $16 for
Emerging Markets.
LMFA, Batterymarch, the Adviser, WAGM and Legg Mason are corporate
affiliates and are wholly owned subsidiaries of Legg Mason, Inc.
7. Line of Credit:
The Funds, along with certain other Legg Mason Funds, participate in a
$150 million line of credit ("Credit Agreement") to be utilized as an
emergency source of cash in the event of unanticipated, large redemption
requests by shareholders. Pursuant to the Credit Agreement, each
participating Fund is liable only for principal and interest payments
related to borrowings made by that Fund. Borrowings under the line of credit
bear interest at prevailing short-term interest rates. For the six months
ended June 30, 1998, the Funds had no borrowings under the line of credit.
34
<PAGE>
- -------------------------------------------------------------------------------
8. Fund Share Transactions:
At June 30, 1998, there were 1,000,000 shares authorized at $.001 par
value for all portfolios of the Corporation. Share transactions were as
follows:
<TABLE>
<CAPTION>
Reinvestment
Sold of Distributions Repurchased Net Change
---------------- ------------------ ----------------- ------------------
Shares Amount Shares Amount Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------
<S><C>
Global Government
--Primary Class
Six Months Ended June 30, 1998 927 $ 8,959 265 $2,556 (2,622) $(25,308) (1,430) $(13,793)
Year Ended December 31, 1997 2,423 24,370 865 8,609 (4,558) (45,415) (1,270) (12,436)
International Equity
--Primary Class
Six Months Ended June 30, 1998 3,827 50,838 -- -- (2,594) (33,910) 1,233 16,928
Year Ended December 31, 1997 10,069 129,976 815 9,546 (5,444) (69,717) 5,440 69,805
--Navigator Class
May 5, 1998(A) to June 30, 1998 4 50 -- -- -- -- 4 50
Emerging Markets
--Primary Class
Six Months Ended June 30, 1998 1,160 10,991 -- -- (872) (8,079) 288 2,912
Year Ended December 31, 1997 5,299 62,511 6 65 (697) (7,468) 4,608 55,108
</TABLE>
- ----------
(A) Commencement of sale of Navigator Shares.
35
